China’s Changing Social Insurance Regulations: What You Need to Know

Even though social insurance is mandatory in China, companies customarily resort to illegal methods to underpay or avoid paying the premiums. Starting January 1, 2019, China is introducing new regulations on how social insurance premiums are collected from businesses. This change stands to affect Chinese manufacturers as well as businesses that source from them.

Under the new rules, Chinese businesses will have to bring their payroll records into compliance, which will considerably increase their tax burden and labor costs. Meanwhile, companies that source from China may be exposed to additional risks in their supply chain.

Key facts about China’s social insurance situation:

Up to 90% of Chinese businesses have non-compliances in payroll records

Labor costs of Chinese companies are likely to increase under new regulations, especially for SMEs

Buyers must take steps to protect their supply chains from potential ethical risks and disruptions

Download our quick guide to learn more about what is going on with China’s social insurance regulations and the potential new risks they may create in your supply chain